Carnarvon Petroleum Limited's (ASX:CVN) March quarterly report shows that the company is in a strong financial position despite the current economic climate as the Dorado joint venture continues its development plans for the project offshore WA.
At the end of the quarter, the company held A$118 million, which managing director and chief executive officer Adrian Cook said meant Carnarvon was in a very good position to cover its 2020 expenditure and beyond.
He said: “During the quarter we have witnessed significant global consequences from the COVID-19 pandemic, with direct and secondary impacts occurring within our industry.
“Maintaining Carnarvons prudent financial position has always been at the forefront of the companys strategy and has ensured that the business is in a robust position to withstand these current market conditions.
“Carnarvon preserved its strong cash balance this period, with A$118 million as at the end of the quarter."
Dorado progresses towards FEED work[hhmc]
The Dorado joint venture with Santos Ltd (ASX:STO) has progressed with field planning work during the quarter with minimal workflow interruption.
Development feasibility studies have been completed and the concept select phase is expected to be completed soon.
Cook said: “The work being undertaken is focused on preparations to commence the Front-End Engineering Design (FEED) phase.
“The sheer size and nature of the Dorado field and expected recovery in the longer-term oil prices means that it is a strong and robust project, capable of producing at globally competitive capital and operating costs.
“On this basis, the Carnarvon team will continue working very closely with the operator to progress the Dorado development and I look forward to providing continued updates as we achieve key milestones.”
Expressions of Interest have been received from Floating Production Storage and Offtake (FPSO) contractors and the joint venture has been working closely with various parties to advance the engineering and pre-FEED workstreams.
Buffalo farm-out process continues[hhmc]
During the quarter, Carnarvon continued planning the redevelopment of the Buffalo oil field in Timor-Leste.
This included advancing the companys operational readiness and ensuring Carnarvon, or an incoming operating partner, has the appropriate systems required for the development, drilling and production of Buffalo.
Cook said: “Carnarvon has continued with its farm-out process and is working with potential partners interested in joining Carnarvon in the project and assisting with its future funding.
The introduction of a partner will be relevant in Carnarvons funding strategy as the company moves towards the development of both the Dorado and Buffalo fields.
In parallel with the farm-out process, Carnarvon has been establishing operations in Timor Leste and developing its operational readiness.
Cook said: “Buffalo is an important asset to Carnarvon and despite the farm-out process taking longer than anticipated, it remains our focus to attract a quality partner on fair terms. “
The company also commenced an evaluation of well data to identify additional follow-up exploration prospectivity for the Buffalo project.
Building data[hhmc]
Carnarvon has recently received data from the Keraudren 3D seismic survey, which builds on previous Capreolus 3D data, and will be integral for better defining the development of Dorado and establishing high-quality exploration drilling targets in the survey area.
The new seismic data will also support the Dorado FEED subsurface work by assisting with the positioning aRead More – Source
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